5 Ways To Deal With High Energy Costs

You don’t need to be reminded. At the gasoline pump and with your utility bills, energy costs are going up at unprecedented rates, affecting your personal and company’s pocketbook. Most people get their energy bills (themselves or for business), curse a little, then shrug one’s shoulders and have Accounting pay it. But there are things you can do about high energy costs – and succeed. Energy costs won’t disappear, but you can do better – and get ahead of your competition.

1.  You do have some control over costs. Understand what your energy bill is made of. Most utilities are regulated by a government entity because they are monopolies when it comes to delivering electricity or natural gas. Con Edison, the largest utility in the nation, just requested a fee raise of 10-15%, if approved by its overseeing agency, beginning in 2023. You, as the public, can certainly let your local commission know your thoughts about any proposed high rate hike. But that’s just delivery. Supplying electricity and natural gas is a different item, and that has gone up about 40% in the last year.

You, the user, can pick your supplier. Yes, you can. In fact, if you don’t pick a supplier for electricity and natural gas, the utility will pick one for you – and it’s not likely to be the cheapest! Take time to research suppliers. Many utilities have links on their website. Compare prices, and there is a good chance you’ll find firms who will supply electricity and/or natural gas at a lower rate than what was assigned to you. Saving $0.02 / kWh, seems small, but is a substantial savings. If you’re a large user (lots of refrigeration or a factory), the potential savings is greater; it would be worth it to retain an energy supply broker, who can get bids from many suppliers who would slash their price to supply a large user like you so much electricity or natural gas. You can save substantially. And you may have the opportunity to lock in a low rate for price security.

2.  Are you being billed properly?  Take some time to review your utility bill. Your utility sends out thousands, maybe hundreds of thousands of bills monthly. Don’t you think some are in error? Review your latest bill. Are you classified correctly? Are the tariffs and other charges appropriate for you? It does not happen often, but utilities sometimes get it wrong. A religious institution was classified as a large industrial facility. Their office never noticed this and just paid the high bills for decades. When the error was brought to their attention, it was corrected for the future and they received a check from the utility for $78,000 for the historic overcharge. Now, that’s some donation!

3.  Are you being wasteful? We know it’s important to produce your product or service of high quality and reliably. But might your processes be wasteful? While redundancy is important in many industries, could operations be overdone? For example, a facility needing hot water for a process uses an appropriately-sized hot water tank, a backup tank, and a backup to the backup tank. It was calculated that they spend $50 / month to keep the water hot 24/7 in the backup to the backup tank. I suggested that they probably never use the hot water from the backup to the backup tank; the $50 / month was wasted. I suggested they turn off the heater for the backup to the backup and if it’s ever needed, then turn it back on for good. They did turn off the heater and never had to put it on again. Another example: lighting. We are concerned with dim areas; is there enough light to perform tasks well and safely. But might there be too much light in an area? This is not only wasteful, but may cause issues, such as glare and distractions. Remove lights from fixtures in overlit areas for a nice energy usage and cost savings.

4.  Renewable Energy.  Might you be a candidate for solar panels, geothermal, etc.? Get energy from a source that is free (the Sun, the stable temperature of air underground). There is an investment needed to set up and support the technology, but the source of power is free (unlike natural gas or oil), and thus, should be a useful way to reduce electricity or gas/oil usage in the future.

5.  Finally, an energy audit.  Simply stated, there has been a literal revolution in gains in energy efficiency in many products the last five years. If an energy audit has not been performed in that time, there will be opportunities. Gains in efficiency of space heating and cooling equipment; lighting; heat pumps; an electric fleet. Have an energy audit performed by an experienced professional. Look at the list of potential strategies and take them seriously. Yes, you’ll have to invest money upfront to procure and install the technology, but you will save handsomely and get your investment back and more. Remember, incentives probably exist from your utility or state government to possibly pay one-third, maybe half the cost for these energy-saving technologies (they want you to save, too). And low-cost loans exist if cash is not readily available. Banks will compete to lend you money because they know energy-saving projects are more reliable for them (the payback to you) than loans for other purposes.

Will these moves reduce your energy costs to zero? No, they won’t. Reduce them by 50% or more? Probably not. But they can definitely take the edge off the big increases in energy costs most are enduring and put you in a more competitive situation.

CCES has the experts to help you navigate through all of these ways to save energy costs as a hedge to inflation. We can work with you and find significant savings. Contact us today at 914-584-6720 or at karell@CCESworld.com.

One problem area in energy efficiency is with landlord-tenant situations. The tenant is not motivated to cut back on energy because when the company leaves the space they normally cannot take the change they invested in with them (lights, windows, etc.). On the other hand, landlords are also not motivated to reduce energy usage, as either the tenant pays for its own usage anyway (sub-metered) or it just passes on the cost along whether high or low. Neither side is motivated, this is a lost opportunity. On the other hand, leases that are “green” or aligned with tenant energy usage have the potential to motivate both sides to invest and cost-share in energy efficiency projects.

A green lease addresses this problem by providing financial incentives to both the owner and the tenant to better realize the benefits of investing in energy efficiency.

Some advantages of a green lease include:

• Faster savings for the landlord, who can choose to avoid amortization, allowing the landlord to recoup all operational savings resulting from an energy efficiency project.
• Energy-efficiency tenant goals written in the lease, requiring tenants to meet basic sustainability goals, can ensure that these spaces add value to building.
• Installing submeters is a direct way for a landlord to make tenants aware of their actual energy consumption and bill tenants according to actual energy use. Instead of charging on a per square foot basis, but not knowing what they use, now the landlord can know what each tenant uses and have them pay accordingly. This will resolve disagreements before they get out of control.
• Side story: a mall owner used a single electric meter and charged all of their diverse tenants based on square footage. Nobody knew what was used and everyone was wasteful (air conditioning, leaving on lights and plug load, etc.). Then the manager realized that the two restaurants in the mall were likely using much more electricity than the other tenants given the considerable refrigeration needs and long hours. Meanwhile, the little family accounting law, and insurance offices were only open 9 to 5 and only used certain simple equipment (personal computers, lights, printers) and realized this was not fair. He had a comprehensive energy audit done and changed the rules to require the restaurants to pay more for electricity and the offices less due to usage. Eventually, he installed sub-meters.

Another area where green leases will be important is in New York City, involving enforcement of their Local Law 97 bill, which contains greenhouse gas emission limits. Building owners must meet a limit and pay a high fine for exceeding it. The owner must calculate using total energy usage, including from tenants, even though the owner does not control tenant operations. LL 97 goes into effect in 2024, and many building owners face high fines, in part, due to their tenants’ energy usage. In anticipation of problems, many new leases contain clauses which apportion part of any future potential LL 97 fine on particular tenants or limits their usage or hours of operation. It is unknown how effective this will be to get tenants to cut down on energy usage to help the owner comply with the law.

CCES has the experts to help you determine tenant and common area energy usage in a wide variety of building types. CCES cannot provide legal advice on green leases but can provide technical expertise in reviewing and complying with them. Contact us today at 914-584-6720 or at karell@CCESworld.com.

On March 22, 2022, the Securities and Exchange Commission (SEC) voted to propose rules requiring companies to provide additional climate-related information in their registration statements and annual reports, including in their financial statements. The intention of the new rules would be to provide consistent and reliable information to investors to help them make judgments about the impact of climate risks on current and potential future investments. The proposed amendments are modeled in large part on the recommendations from the Greenhouse Gas Protocol.

The SEC vote provides that the proposed amendments would supplement (rather than replace) the disclosures already required in SEC filings and that companies should thus continue to assess whether disclosure of climate risks is still required per applicable guidance.

The Release sets forth proposed rules dealing with Climate-Related Disclosure, Climate-Related Impacts, Governance, Risk Management, Financial Statement Metrics, GHG Emissions, Attestation of Scope 1 and Scope 2 Emissions Disclosures, and Targets and Goals.

The proposed climate-related disclosures would apply to a registrant with Exchange Act reporting obligations and companies filing a Securities Act or Exchange Act registration statement. These climate-related disclosures and other metrics would be required in appropriate registration statements and Exchange Act annual reports. The proposed rules would also require registrants to disclose any material change to the climate-related disclosure provided in a registration statement or annual report.

The proposed rules would require a registrant to disclose any climate-related risks reasonably likely to have a material impact on the business or financial statements, which may arise over the short and long term. “Climate-related risks” is defined to mean the actual or potential negative impacts of climate-related conditions and events on a registrant’s operations, financial statements or value chains, as a whole. “Value chain” means the upstream and downstream activities related to a registrant’s operations. “Upstream activities” are defined to include activities – even by a third party – that relate to the initial stages of the product (supply chain and fabrication). “Downstream activities” are defined – again, even by a third party – related to the fabrication to make the finished product and its delivery of the good or service to the end user. The entire sequence from supply chain to end of use need be evaluated. Thus, the SEC is defining climate-related risks extend beyond a registrant’s own operations to those of its suppliers and distributors.

The proposed rules would require a registrant to identify the type of climate-related risk (physical or financial), its details (for example, for a physical risk, specifically, what and where it is (i.e., flooding or hurricane zone), and the material (bottomline) risk), and the registrant’s plan to mitigate it.

The proposed SEC rule permits, but does not require a registrant to disclose information about any “climate-related opportunities” it may be considering to pursue.

Please note that this is not a legal interpretation of the proposed SEC rule. If you want more information on it and its impacts on your company, please engage a legal professional with experience in this area. CCES has the technical experts to help your firm identify physical and other risks and opportunities of climate change. Contact us today at karell@CCESworld.com or 914-584-6720.

The cooling season is winding down, which means you may forget about your boiler for the next 5 or 6 months. Well, hopefully you will hire an HVAC to clean and test your boiler and you’ll re-insulate any pipes whose insulation has gotten frayed or fallen off. Good. But there is another area that is often overlooked but can lead to a major cost savings during the heating season when fuels are highest in cost: steam traps.

If you have them, steam traps represent a potential source of energy loss. Steam traps are there to keep steam in your radiators where the latent heat can effectively warm a space and prevent it from leaving and returning with condensate. If steam leaves a radiator, that is wasted heat or, to put it more accurately, wasted natural gas or oil to produce that heat and wasted expense for you. Fortunately, steam releases most of its latent heat in a radiator. But a failed steam trap can let through significant steam (say, 20% of what enters), raising your energy bill by 20% more than you are already paying.

Steam traps can fail for a variety of reasons, mainly age. After all, they are working in a very hot environment. A rule of thumb is that a steam trap is effective for about 5 years. There are many exceptions to this rule, but something to keep in mind. If your steam traps have not been tested in several years, there is a good chance that a significant percentage is not operating ideally and allowing steam to leave the radiator, and as stated above, causing you to waste energy and expense.

The problem is that one does not know which steam traps are failing because heating is a closed system. Steam traps do not “announce” themselves operating or failing! Thus, periodically it is important to test your steam traps by using an ultrasonic leak detector, which can detect and inform you of steam leaking through traps. A good leak detector will enable a user to hear the rushing sound of a leak to determine the need to replace. Testing can save significant energy costs, especially in this age of high fuel costs!

If energy cost savings is not enough to convince you to implement a steam trap testing protocol, think about safety, security, and longer lasting equipment. Steam going into the condensate can potentially shorten the life of piping and storage tanks of your system, costing quite a bit to repair or replace. And, of course, being able to use less natural gas or oil to heat your space also means lower greenhouse gas emissions.

When is a good time to perform the steam trap testing? Now or very soon, as the heating season is winding down. Inventory and test your existing steam traps while your boiler is still producing steam for space heating. After testing, you will have a list of which steam traps have passed and which have failed. Now you have the summer to properly procure and replace the failed steam traps and you are assured of a much more efficient heating system in the fall when space heating is needed again. And with fuel prices at record highs, any effort to reduce energy waste is very beneficial.

CCES has the experts to perform, recommend and/or oversee the maintenance of your boiler system, including testing and conditioning your boiler, installing new insulation, and performing steam trap testing. Now is the time to start the effort so you have an efficient system in the fall. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Have an old boiler and/or AC system? Frustrated by high energy bills (who isn’t?)? Look to make an investment in a different technology that will provide reliable heating and cooling to a space and reduce energy usage, greenhouse gas emissions, and cost. I am talking about an air source heat pump. This is not an old technology; it has existed for quite awhile. Its recent step up is its ability to heat a space even in Northern climates.

An air-source heat pump system uses refrigerant to move heat across a wall. In the wintertime, it takes heat from the outside and transports it to the inside space. This seems counterintuitive. Even on a bitter cold day, the huge reservoir of cold air does contain heat. That heat warms a liquid refrigerant to a gas which through a compressor transports the refrigerant and releases the heat to the indoors. In the summertime, the reverse happens. The refrigerant takes heat from a hot room and delivers it and releases it through a coil to the already hot outside.

What makes an air source heat pump a good investment is that this can be done using less energy than other HVAC equipment. It takes less energy to move heat from one place to another compared to creating heat, such as a boiler combusting a fuel (purchase, transport of the fuel and then combustion and ensuring that heat is not lost).

Air source heat pumps can be built into walls or mounted onto the ground right outside a building or be placed on a roof. They do not take up a lot of space (compared to boiler systems), but do require some construction and, potentially, putting holes in walls.

Air source heat pumps can be controlled by any of a variety of automated controls to pre-program set points for heating and cooling or automated controls (remotes) to turn on and off such systems. Mini-split systems, packaged terminal air-source heat pumps, and single-package air-source vertical heat pumps are options for appropriate spaces.

Why you should consider air source heat pumps:

• Cost.  Air-source heat pump systems provide heating and cooling more efficiently, using electricity, rather than combusting a fuel. Such systems can reduce heating energy use by up to 50% compared to comparable technologies. One need not deal with the price surges of natural gas and oil.
• Reduced maintenance.  Such systems require less maintenance than boilers, such as the absence of fuel storage, insulation, and cleaning boiler tubes.
• More pinpoint comfort. Air source heat pumps can provide heating or cooling from room to room, rather than having to heat or cool a large space, reducing energy waste. Controls allow even better temperature and humidity control.

• Environmental upgrade. Besides the reduction in greenhouse gas emissions by using electricity for energy rather than fuel oil or natural gas, heat pumps do not create onsite emissions; your employees and the public will breath cleaner air and you get all of the health and wellness benefits of this. In addition, by ridding yourself of a combustion source, you reduce the risk of fuel leaks and carbon monoxide poisoning.
• Incentives aplenty.  Many building owners hesitate to implement energy upgrades because they do not have the money on hand to purchase such systems. Air source heat pumps are being pushed strongly by a number of utilities and states nationwide, as they recognize this as a step toward meeting energy and greenhouse gas emission reduction goals. Thus, many utilities will pay you back handsomely for installing air source heat pumps, as much as 50, 60 or a higher percentage of your installed cost.

Significant, long-term energy cost savings and potentially paid for in large part by your local utility or government. In this age of skyrocketing energy costs, air-source heat pumps can provide reliable and controlled comfort at a low cost for you. Get more information on air source heat pumps from Energy Star (www.energystar.gov).

CCES experts are here to assess your building and determine whether air source heat pumps or other technologies will reduce your energy usage and costs significantly as a worthwhile investment. Contact us today at karell@CCESworld.com or 914-584-6720.

As has been well-publicized (and in companion article), the US has been hit by both high inflation and supply chain issues. Cost inflation rose in 2021 by 7%, the highest rate in over 30 years. And energy costs remained the top driver of this high inflation in 2021, rising 29%. Gasoline costs rose 50% and fuel oil costs 41%, according to the US Bureau of Labor Statistics. If all of the other arguments made over recent years to do an energy audit and prioritize reasons to save usage and cost have not succeeded, now they must. And if you are thinking “Oh, these increases cannot be maintained”, well, that’s simply not necessarily true. And the beauty of energy savings is that smart actions you take will save you energy costs for many years down the road in future good times and bad. So don’t wait!

So what is the first step? Get a handle on your energy bills. Go back and retrieve your energy bills, going back 2 years. Don’t forget to include oil invoices, too. Just like you track sales, expenses, etc., you should track energy usage and costs. Create a simple spreadsheet or Word document to catalog the usages and note changes over time. See if your energy bills have risen that much.

Then have a professional energy audit done. There has literally been a revolution in the last 5 years of new technologies that will save energy costs. A professionally-performed energy audit will inform you of what options you have either in terms of modern replacement technologies or of changes in operations to reduce energy waste. Some of the options may be very cheap or free, such as changes in settings. Others may be expensive upfront, but many utilities and governments have rebates and other subsidies to partially pay the upfront cost. If you pay your utility bill, you would qualify. And a growing number of governments offer “C-PACE” financing, which is subsidized and allows you to pay back the loan in installments like you pay your local taxes in the same payment. Even without that, lenders know that energy efficiency technologies are cash positive; there is less risk of lending money because the savings will be there.

Take your energy audit report seriously and read deeply into it. The energy professional will likely provide multiple ways to reduce energy usage. Take them seriously. You may not be able to do all of them at once, but certainly be assertive and go forward with several. You do want to cut down your energy costs as they rise so much. Consider hiring a project manager to implement the strategies you select. Yes, you will have to pay extra for the expertise, but if that person will better ensure the strategies are incorporated properly and the energy savings predicted will be achieved, then it is worth that price. Remember your energy savings from just about any upgrade is not a one year thing, but will continue to save you money for many years in the future. If poor or no project management means the device is 10% less effective, then that is a much greater loss in avoided cost over time than what you would have paid the professional.

There have been many cases – and many I have seen – of companies and managers who have turned down good, energy-saving projects because they did not “have to” or they felt the savings were not enough. Those days are gone. Those that held back a few years ago are paying a steep price now for that attitude with energy costs having risen by 29% in the last year. Don’t make that mistake. Do an energy audit the right way and go forward on smart energy saving projects!

CCES has the experts and experience to perform these services for a variety of building and operation types. We have many years of experience of performing many types of energy audits and equipment assessments and retro-commissioning to determine multiple ways for you to save energy costs. We can project manage and bring in the best experts to install and ensure good performance of energy strategies you select. Contact us today at karell@CCESworld.com or at 914-584-6720.

In January, the New York State Assembly and Senate introduced identical bills seeking to impose environmental, social and governance (ESG) requirements of the fashion industry. (https://www.nysenate.gov/legislation/bills/2021/A8352)   If passed, the “Fashion Act” would make New York the first state in the country to require fashion retail sellers and manufacturers to publish extensive disclosures about their supply chains and their environmental and social due diligence policies, processes and outcomes and to set binding targets to reduce those impacts.

The Fashion Act applies to fashion retail sellers and fashion manufacturers, defined as business entities that primarily sell articles of apparel or footwear and list “retail trade” or “manufacturing” as their principal activity. Subject companies must do business in New York State and have annual global gross revenues exceeding $100 million.

The Fashion Act imposes ESG disclosure of a supply chain map; social and environmental sustainability report; impact disclosures of certain environmental and social impacts; and annual reports tracking progress toward risk and impact reduction. Subject companies must prominently post these disclosures on their websites.

Subject businesses must map at least 50% of their supply chain by volume across all stages of production from raw material to final production. Such a supply chain map must include suppliers and supply chains associated with certain prioritized risk areas identified in the entity’s Sustainability Report, including names of such suppliers.

Briefly, the Sustainability Report must identify business risks and measures taken to ensure “responsible business conduct” in policies, according to principles set forth by the United Nations and other organizations. The Sustainability Report should also identify areas of significant risks in the context of its supply chains, including, for example, geography-related risk factors (governance, human rights, or environmental adverse impacts) and enterprise-specific risk factors (known instances of misconduct). The Report should identify actions taken by to mitigate identified risks, including benchmarks for improvement and progress. The Report should also assess the extent to which the company’s activities have impacted the identified risks and ways it has remediated following discovery of an adverse impact.

The proposed rule requires disclosure of greenhouse gas (GHG) emissions, which must be based on the reporting standards of the World Resources Institute and be independently verified. Reporting must include a baseline of current energy usage, GHG emissions, water usage and chemical management, as well as reduction targets.

The proposed Fashion Act allows both the New York State attorney general and the public the right of enforcement action. A private citizen may start a civil action for alleged violations of the Fashion Act.

Should the Fashion Act become law, it would require companies to comply with its various disclosures within 12 to 18 months of promulgation.

Please note that this is not a legal interpretation of the proposed bill. Please read the proposed bill and speak to qualified, experienced legal counsel before taking any actions. CCES has the experts to help your firm – whether in the fashion industry or not – to perform a professional GHG emissions inventory (“carbon footprint”) for your operations ahead of this or other legislation. Such a carbon footprint can help your company find ways to make your operations more streamlined and save you expenses. Contact us today at karell@CCESworld.com or at 914-584-6720.

All the talk these days is achieving “net zero”, a state where we the Earth absorbs as much carbon as we emit. Is this achievable? After all, from a global point of view, the vast majority of our energy still derives from fossil fuel. Not sure? See all of the news about OPEC and other energy producing companies. They are still doing well. And what about our agriculture and deforestation? Achieving “net zero” means a complete change to the global economy and probably how we live our lives. Can we do it? At what cost?

This means all of us will have to change the way we live, the way we work, the way we play, the way we socialize. Drive electric cars. Only travel when you have to. Only use energy (and it better come from clean sources) when you have to.

What might be scariest is the how. There is no magic solution, a magic “pill”, nothing even a well-intentioned company can invent something to achieve net zero with no impact on our lifestyles. Also, it will take all of us, every country to change our ways of life for net zero. If one major country decides not to take part for foolish political reasons of an egotistical autocrat, we probably will not achieve net zero. Can we act as people on one planet to make the changes needed to propel us to net  zero? Here’s what must happen – at a minimum:

• Governments and the public must encourage research and development of new products and innovations to make low- or no-carbon options feasible, affordable, and and acceptable. Yes, that may mean “taking sides” or investing in technologies that may turn out not to work, but we must take this risk to achieve innovations that will help us achieve net zero. For those of us old enough, we remember the race to the Moon in the 1960’s. Those innovations had a much greater positive impact on our lives beyond taking astronauts to outer space!
• Markets and financial institutions must recognize the importance of these new products, too, and change their mindset from reward only those that make short-term profits, but also those that work on risky ventures, too.
• But making good products is not enough. We must have the strength to invest in actually implementing them so they are available and affordable to all around the globe. What use is an electric car if there are not enough charging stations to make its use practical for everybody? That may mean “tearing up” a lot of infrastructure to make the innovations practical and, therefore, costly, for little short-term gain. But these changes and inconveniences must occur.
• Governments must cooperate internally. Governments must spend the resources on infrastructure and other non-glamorous items to allow the proliferation of these products, even if they are not politically palatable. Politicians and people must stop sniping at innovations, just because they are new or different.
• And governments must cooperate externally, too. Governments must band together to encourage innovation and not to keep discoveries “in-house” only. In addition, governments must make sure that successful innovations be implemented not only for the short-term gain of their own citizens but be rolled out to the entire global population. Governments should not be afraid to pass laws that mandate carbon emission standards or otherwise mandate or encourage the use of these technologies and should coordinate these laws with other governments.

To avoid major catastrophes that will cost all of us much more in lives, money, and quality of life in the future it will be important to be successful in all of these areas.

CCES has the experts to help your company address Climate Change issues, such as determining thoughtful strategies to reduce your greenhouse gas emissions significantly. Contact us today at karell@CCESworld.com or at 914-584-6720.

The world’s longest subsea electricity interconnector recently opened. The UK and Norway are now able to share renewable energy for the first time.

The $2 billion North Sea Link (NSL), a joint venture of National Grid and the Norwegian operator Statnett, has started commercial operations, marking a major milestone in Europe’s journey to be net zero. They estimate that by transmitting electricity from renewable sources from Norway to the UK, NSL will cause avoidance of 23 million metric tons of CO_2e emissions by 2030.

The 450-mile cable, which connects the Norwegian area near Stavanger with Blyth in the Northumberland region of the UK, started with a maximum capacity of 700 MW and will gradually increase to a full capacity of 1,400 MW. At full capacity, NSL will provide enough clean electricity to power 1.4 million homes. It is a two-way connection, transporting hydropower from several Norwegian reservoirs and power from Northumberland wind farms. In the summer, when demand is highest and winds are low in the UK, they will get needed power form Norway. In the winter, when some reservoirs freeze and movement is minimized, power will be brought to Norway from the UK wind farms.

NSL is the 5^th interconnector for National Grid, which also operates links to Belgium, France and the Netherlands. By 2030, 90% of electricity imported via National Grid’s interconnectors will be from zero carbon sources saving 100 million metric tons of CO_2e, equivalent to taking two million cars off the road.

Can this be replicated in the US? Can electricity from hydro, wind, or solar farms be sent subsea between countries or regions in the Western Hemisphere? NSL took 6 years to build, using over 4 million labor-hours and 5,880 labor-days at sea.

CCES has the experts to help you assess your energy sources and help make them as reliable, inexpensive, and green for you as possible. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Energy prices went through a roller coaster ride in 2020 and 2021, dropping during the early months of the COVID-19 pandemic, then rising more than every commodity except one (see later). The rise was driven in large part by basic economics: increased demand for energy due to the economic recovery of the COVID-19 pandemic, which outpaced crude oil and natural gas production, according to the Energy Information Administration (EIA). Producers had cut production during the early months of the pandemic as lockdowns suppressed demand so greatly. Then when demand roared back, it took time to get production out of mothballs and respond to the new strong demand. Extreme weather events also contributed to the rise in energy prices in 2021, such as the Texas winter storm in February and Hurricane Ida in September.

Prices of the energy index group of the S&P Goldman Sachs Commodity Index (GSCI) (https://www.eia.gov/todayinenergy/detail.php?id=50718) rose 54% in 2021. By comparison, most other commodity prices grew by about 20% in 2021. This major rise was most influenced by two crude oil benchmarks, the West Texas Intermediate and Brent, which influences global oil pricing. Natural gas prices increased the least among energy commodities, but still rose by 38% in 2021.

Higher prices for oil and coal and higher prices for carbon emission credits resulted in increased electricity rates worldwide, the International Energy Agency says (https://www.iea.org/commentaries/what-is-behind-soaring-energy-prices-and-what-happens-next). Such market tumult led to global power shortages, particularly in Europe and China, the latter cutting power supply for a time in certain regions, slowing manufacturing and contributing to the current global supply chain concerns.

Which commodity’s price increased more than energy’s in 2021? Something you may need in order to cope with the energy and electric price rises: coffee.

Where are energy prices headed in 2022? There seems to be major disagreements in forecasts. The US government predicts both oil and gas prices will decline in 2022, while several private sector forecasts predict the opposite occurring. The EIA (government) says that production will maintain its high levels throughout 2022 and, therefore, meet growing energy demand as the world recovers from or at least copes with COVID. Plus, the government released oil from its strategic reserves. The EIA predicts a drop in oil (and, therefore, gasoline) prices of about 10-15% in 2022. Several banks and financial institutions do not agree, saying the release from strategic reserves will cause only a temporary leveling of energy prices and that while oil and gas production is being maximized, some demand has still been depressed because of COVID, but will be fully released as the world recovers or copes with the disease. A couple of major banks/institutions predicts a 15-20% rise in oil prices in 2022.

One factor assumed in the models is the behavior of OPEC oil producers. OPEC has stated that it plans to raise oil production in 2022. If they follow through and keep oil production high and consistent, then the government models may be correct. If infighting or other factors depress production, then prices will likely rise in 2022.

Whether energy prices drop some or go up more in 2022, there is no question that energy prices will continue its long-term rise that has been occurring over many years, far outpacing inflation. Companies should take into consideration and assume that their own energy bills will rise significantly in the foreseeable future.

CCES has the experts to help your firm or entity reduce energy usage and save significant costs with tried-and-true strategies, without major disruptions – all the more important as base energy rates are increasing much more than inflation. Contact us today at karell@CCESworld.com or at 914-584-6720.